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Barclays “Lie-More” Scandal: Moral Bankruptcy

Posted by Larry Doyle on July 9, 2012 11:36 AM |

The scandal centering on the rigging of Libor has the potential to rock the entire financial industry like no other scandal in our lifetime. While I have witnessed some industry insiders and others on the periphery attempt to downplay the impact of this scandal, they are mistaken in their analysis.

I would love to be privy to the conversations currently ongoing between individuals at the Fed, Treasury, Department of Justice, the CFTC, SEC, FINRA and their counterparts at the Bank of England, the FSA, other central banks, and regulatory authorities. While I have no doubt that selected financial fiascoes have been conveniently kept under the rug, I do not think there is a rug large enough to cover up this mother-of-all-scandals.

As this scandal continues to unfold, I think it may very well have a significant negative impact on the overall equity markets. Why? As investors hear and learn more about this scandal, they will be inclined to sell the market as a vote of no confidence and no trust in the overall system.

For added flavor I highly recommend these two recently released video clips. The first runs just over 9 minutes and is especially hard-hitting. The latter, not quite 7 minutes, addresses the magnitude of this scandal.

Larry Doyle

Related Sense on Cents Commentary
Barclays Libor Scandal: Reports Regulators Knew; Time for Independent Investigation and Eliot Spitzer
Barclays Libor Scandal: How Big Will This Get?
Barclays Libor Scandal: Reports Regulators Knew; Time for Independent Investigation and Eliot Spitzer
Barclays Libor “Price Fixing”: Collusion Is Illegal. . .

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • coe

    Doesn’t this sad episode evoke memories of Watergate on the single most crucial level – that is, powerful and privileged “leaders” rationalizing that their actions are “in the peoples’ best interests” and surely above the law…Chinese Walls? Are you kidding me?…

    Is it all that shocking that folks believe the regulators were run over at best, or complicit at worst in this episode?

    Clearly, the proportion of revenues earned by Barclays in their IB division was boosted by the “rigging of LIBOR”. And, by extension, was the pay packages of the leaders and others. Just take a look at Bob Diamond’s expression in one of the clips. Pretty sickening.

    In 20/20 hindsight, it seems fair to say that many actions of the banks, central banks, and regulators that occurred in reaction to the crisis (begging the question of what similar “bad behavior” caused the crisis), have proven to be quite flawed.

    This is BIG, LD…but I suspect most want it to be swept under the rug!

  • Hawk

    The system is broken.

    The regulators should be in jail too.

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